Volume 218, Issue 1-2

The paper analyses the short-, intermediate- and long-run effects of anticipated supply side policies within a two-country model of a currency union that is characterized by perfect foresight dynamics, saddle-point stability and the incorporation of intermediate goods imports. We show that both a reduction of labor extra-costs and a revenue neutral cut in the employers’ contribution to the social security has indeterminate short-run effects resulting from an ambiguous exchange-rate jump in the announcement interval. However, the policies achieve in the long-run an unambiguous rise in aggregate output and employment. The employment increase is stronger than the output expansion due to a decline in the producers’ real wage rate and a rise in the real factor price of the intermediate goods imports. Our results display positive long-run output and employment effects as well, if the employers’ and the employees’ contributions to the social security are reduced simultaneously and the revenue loss is compensated by an under-proportional rise of the VAT-rate. Unilateral supply side policies have ambiguous spillover effects in the second member country of the union.

Using a monetary exchange rate model with flexible prices this paper analyzes the exchange rate dynamics of a credible, time-contingent transition from flexible to fixed rates. Such a switch of exchange rate regime can be applied to alternative realistic events. First, the regime switch can be regarded as a first approximative model for the European Monetary Union subject to the Maastricht timetable. A second application arises from the decision of the monetary authorities to peg the (presently floating) domestic currency to a curreny basket or a single foreign currency at a given date. With respect to Stage 3 of the EMU, three different methods of how to fix the final conversion rates are at the centre of the actual political debate: the rule of a fixed conversion rate, the “average”-rule and the “market”-rule. The alternative rules generate different exchange rate paths which will be derived formally. By this, typical features, e.g. exchange rate jumps and effects on the variance, can be analyzed analytically and compared to each other. It is shown that the first rule provides the most “stable” exchange rate behaviour during the interim period.

In this paper we derive the welfare for a domestic and foreign market (and the world welfare) in the case of domestic export subsidies. The underlying model is that of a spatial oligopoly with domestic and foreign firms. It can be shown that export subsidies increase the domestic welfare under non price discrimination and also under price discrimination in the case of low subsidies and perfect information of the consumers. The foreign welfare increases with higher export subsidies, if the foreign area is not very small. The world welfare also increases with higher export subsidies.

The objectives of this paper are (i) to assess the actual economic implications of the new European banana policy on prices, consumption and trade in Germany within a theoretical and quantitative analysis; (ii) to elaborate the welfare implications of the European banana market policy on the German banana market from the national compared with the EU’s point of view. The new European banana market policy led to the introduction of a tariff quota system on the formerly unprotected German banana market. This caused a substantial increase in German import prices for bananas, e. g. in 1994 by 95 % compared with the hypothetical situation without trade protection. Further consequences were a strong reduction of import demand and clearly rising import expenditures, by 22 % and 53 % respectively in 1994. The new banana protection on the German market caused substantial losses in consumer surplus: 1039 mill. DM in 1994, as well as deadweight losses. The size of the deadweight losses was clearly higher from the German than from the EU’s point of view. High quota rents of European traders and budgetary gains at the EU level compensated a substantial part of German consumers’ welfare losses at the EU level. This is much less the case for Germany, given the allocation of import licences in the European banana trade and the common financial system in the EU. Strong and untargeted redistributive consequences were induced by the new European banana policy even within the EU. Zusammenfassung Zielsetzung dieses Beitrags ist es, a) die ökonomischen Auswirkungen der neuen Europäischen Bananenmarktordnung auf Preisbildung, Verbrauch und Handel in Deutschland im Rahmen einer theoretischen und empirischen Analyse herauszuarbeiten; b) die Wohlstandswirkungen der EU-Bananenmarktpolitik auf dem deutschen Bananenmarkt aufzuzeigen, wobei die nationale Sichtweise von der Sichtweise der EU insgesamt unterschieden wird. Mit der neuen Europäischen Bananenmarktordnung wurde ein Zollkontingentierungssystem auf dem vormals liberalisierten deutschen Bananenmarkt eingeführt. Dies führte zu einer erheblichen Steigerung der deutschen Importpreise für Bananen, z. B. um 95 % im Jahr 1994 im Vergleich zur hypothetischen Situation ohne die Politik. Weitere Wirkungen waren eine starke Verminderung der Importnachfrage und deutlich steigende Importausgaben, um 22 % bzw. 53 % im Jahr 1994. Mit der neuen Bananenmarktordnung waren hohe Verluste an Konsumentenrente am deutschen Markt verbunden, die 1994 1,04 Mrd. DM betrugen, sowie aggregierte Wohlstandsverluste. Die aggregierten Wohlstandsverluste waren eindeutig höher aus deutscher Sicht als aus Sicht der EU insgesamt. Die Wohlstandsverluste der deutschen Verbraucher wurden auf EU-Ebene durch hohe Quotenrenten von EU-Händlern am deutschen Markt sowie durch zusätzliche Zolleinnahmen zu einem erheblichen Teil kompensiert. Für Deutschland war dieser Kompensationseffekt weit geringer als Folge der Aufteilung der Importlizenzen und des gemeinschaftlichen Finanzierungssystems in der EU. Es kam damit auch innerhalb der EU zu starken und ungezielten Verteilungswirkungen als Folge der Europäischen Bananenmarktordnung.

Many studies of symmetric price transmission between vertically or spatially linked markets make use of cointegration methods. When estimating asymmetric price transmission, however, a method developed by Wolffram in 1971 is still used. This method fails to consider the time series properties of integrated processes. We explore the relationship between asymmetric price transmission and cointegration and demonstrate that Wolffram’s approach is incompatible with cointegration between two price series. We then develop an alternative method for the estimation of asymmetric transmission between integrated time series. This method is applied to wheat price data from the world’s major exporters, data for which Mohanty, Peterson & Kruse (1995), using Wolffram’s approach, have recently presented evidence of asymmetric transmission.

Some recent empirical studies reveal countercyclical price-cost margins. From a microeconomic point of view this is not plausible because for the overwhelming number of industries, profits are highest in boom. As indicators of profitability price-cost margins should be procyclical. However, it will be shown that a margin relying on marginal cost can behave countercyclically or remains constant even with procyclical profits. A margin based on average cost is a better indicator of the development of profits. Therefore, empirical analysts should not regard different definitions of price-cost margins as equivalent. Zusammenfassung In einigen neueren empirischen Arbeiten erwiesen sich Preis-Kosten-Margen als kontrazyklisch. Aus mikroökonomischer Sicht erscheint dies unplausibel, weil die Gewinne in den meisten Branchen in Boomzeiten am höchsten sind, und daher Preis-Kosten-Margen als Gewinnindikatoren prozyklisch sein sollten. Es wird gezeigt, daß sich Preis-Grenzkostenmargen trotz einer prozyklischen Gewinnentwicklung kontrazyklisch verhalten oder konstant bleiben können. Eine Preis-Durchschnittskostenmarge zeigt die Gewinnentwicklung dagegen besser an. Die empirische Aussagekraft unterschiedlicher Preis-Kosten-Margen kann daher keineswegs als äquivalent betrachtet werden.

For the Federal Republic of Germany and for Baden-Württemberg, with its high concentration of manufacturing and a large share of innovative firms, understanding the economic relationship between technological change, employment and skill structure is of utmost importance. In an effort to quantify the employment effects of technological progress, labour market demand growth in the West German and Baden-Württemberger manufacturing sectors between 1992/94, 1993/95, and 1992/95 are estimated separately for small and large firms. The impact of process innovations on labour demand growth tends to be negative, while that of product innovations is part positive and part negative. The combined effect of process and product innovations depends on the time period and the firm size under investigation. However, the impact was most often negative. Differences in skill structure between innovative and non-innovative firms are investigated using a rank correlation analysis. Technological progress has a tendency to release unskilled labour. Pressure to increase skill levels is more evident in innovative firms.

In a framework of a monetary asset pricing model with production the effects of monetary and fiscal policy shocks are investigated. The model is kept simple enough to generate explicit formulae for the equilibrium price functions. With money yielding liquidity services in the exchange process real stock prices are negatively correlated with stochastic fiscal policy changes, while the impact of structural fiscal policy on the stock market depends on the level of private consumption in the economy. Moreover, shares provide protection against inflation from monetary shocks, and a suitably chosen structural fiscal policy can be used to achieve a stabilization of the real rates of return of both assets. Zusammenfassung Im Rahmen eines monetären Asset-Pricing-Modells mit Produktion werden die Effekte geld-und fiskalpolitischer Schocks untersucht. Um explizite gleichgewichtige Preisfunktionen formulieren zu können, ist das Modell möglichst einfach gehalten. Geld erzielt dabei im Transaktionsprozeß Liquiditätsdienste, so daß es als koexistierende Vermögensanlage von den Konsumenten gehalten wird. Reale Aktienpreise sind negativ korreliert mit stochastischen Änderungen der Fiskalpolitik, während der Einfluß struktureller fiskalischer Schocks auf den Aktienmarkt vom Niveau des privaten Konsums in der Ökonomie abhängt. Außerdem bietet Aktienhaltung einen Schutz gegen Inflation, und eine geeignet gewählte strukturelle Fiskalpolitik kann die realen Ertragsraten der Vermögenstitel stabilisieren.

Cross section data originating from neighboring spatial units - frequently used in Regional Sciences - is not only affected by heteroscedasticity but is often also mutually dependent. This dependency can be taken into account by using models explicitly designed with spatially autocorrelated error terms or dependent variables. Due to lacking familiarity this field of Spatial Econometrics is often neglected. In order to improve this situation, the paper is not restricted to a survey about the most common spatial autocorrelation models: After a short introduction about the general inclusion of space into econometrics and how the concept of spatial autocorrelation works, possible consequences of not taking the interdependence structure into account are shown as a novel feature. After that, useful test statistics are mentioned and their general properties are discussed. Furthermore it is shown that OLS is not suitable when estimating such autocorrelation processes and that ML may cause computional burden. A favorable GMM methodology is therefore presented. The explanation of these topics is complemented by some Monte Carlo studies which examine the small sample properties of the tools mentioned.

Data from the 1988 Income and Expenditure Survey were used in a static microsimulation to estimate redistributional effects of different health care financing reforms under discussion or already introduced to the statutory sickness funds in Germany. Though quite aged, the data used is the youngest appropriate dataset available. Neither of the simulation models (“introduction of perfect competition”, “raising income ceilings”, “revised family insurance” and “inclusion of property income”) yielded a noticeable redistributional impact which is contrary to expectation uttered in public opinion.

Monte Carlo methods are widely applied in statistics and econometrics and have been found to be powerful tools. In general, Monte Carlo methods are based on pseudo random numbers. Hence, the relationship between some fundamental understanding of randomness and its application in Monte Carlo methods is rather weak. The difference between Monte Carlo and quasi-Monte Carlo approaches consists in the fact that in the latter the mention of randomness is replaced by some measure of uniformity of distribution of the points used for the analysis. These measures are chosen in a way to obtain optimal results from numerical integration, stochastic simulation or estimation based on the quasi-Monte Carlo sampling. The paper presents some fundamentals of quasi-Monte Carlo methods including the generation of good point sets for application. Furthermore, some hints at the potential usefulness of these methods in statistics and econometrics are given.

It is shown that a minimum of the variance V(Ŷ HT ) of the Horvitz-Thompson estimator with value zero can be found in the interior of the region of feasible probabilities of selection z i (0 < z i < 1; ∑ z i = 1), if y N /Y < 1/n, where the units i = 1,...,N of the population are ordered according to their values y i > 0; Y is the total. Other zero-points of the variance can be found by taking units apriori into the sample. If y N /Y > 1/n, units must be taken apriori into the sample to attain V = 0. An objective rule for the number of these units is given. Zusammenfassung Es wird gezeigt, daß ein Minimum m der Varianz V(Ŷ HT ) des Horvitz-Thompson Schätzers mit Wert 0 im Innern des Bereiches zulässiger Auswahlwahrscheinlichkeiten z i (0 < z i < 1; ∑z i = 1) nur gefunden werden kann, falls y N /Y < 1/n, wobei die Einheiten i = 1,...,N der Gesamtheit der Größe der Merkmalswerte y i > 0 nach geordnet sind; Y ist der Totalwert. Weitere Nullstellen der Varianz erhält man, indem Einheiten apriori in die Stichprobe genommen werden. Falls y N /Y ≥ 1/n, kann V = 0 nur erzielt werden, indem Einheiten apriori in die Stichprobe genommen werden. Eine objektive Vorschrift für die Auswahl dieser Einheiten wird angegeben.